March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors®. The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4 percent below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.
The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, says home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he notes. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”
The PHSI in the Northeast fell 3.2 percent to 63.4 in March and is 18.4 percent below March 2010. In the Midwest the index rose 3.0 percent in March to 83.5 but is 16.6 percent below where it was a year ago. Pending home sales in the South jumped 10.3 percent to an index of 110.2, but are 10.5 percent below March 2010. In the West, the index increased 3.1 percent to 103.7 but is 4.1 percent below a year ago.
“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun says.
“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun adds.
Friday, April 29, 2011
Monday, April 25, 2011
Slow Home Movement Focuses on Building Homes That Work for Occupants
John Brown believes a home should ease the stress in life, not contribute to it.
Brown is the founder of the slow home movement, a philosophy of home design that emphasizes livability and sustainability. It’s about building a home that works for the occupants, not one that’s intended to impress.
The concept was inspired by the slow food movement, with its focus on healthful, sustainable ways of producing and preparing food, explained Brown, an architect, real estate broker and architecture professor in Calgary, Alberta. “You can think of the typical cookie-cutter house as being like fast food”—often supersized and designed to satisfy our craving for beauty, he said. It’s a house that’s designed to seduce us into buying by feeding our fantasies of a more glamorous life, he said, not one that’s necessarily easy to live in or easy on the environment.
A slow home, on the other hand, is reasonably sized and carefully designed to support its occupants. It might have an entry where family members can easily take off their boots, stash their keys and store their backpacks, for example. It might have a living space that encourages people to talk or read, not just watch television or surf the Internet. It’s energy efficient, filled with natural light and designed for easy flow among rooms and access to the outside. “It doesn’t have to be fancy. It doesn’t have to be expensive. It just has to be easy to live in,” Brown said.
Brown and his partners design these types of houses through their firm, Housebrand, and they encourage others to do the same through the educational outreach they call Slow Home Studio (http://www.slowhomestudio.com). Brown and his partner Matthew North have also written a book on the subject, What’s Wrong With This House? Fast Houses, Slow Homes and How to Tell the Difference.
Architect Hallie Bowie has long been guided by a similar philosophy in designing home additions and renovations through her Akron company, New Leaf Home Design. But before learning of the slow home movement recently, she never had a name for it, she said.
Bowie sees the movement as a marriage between green building and the “not-so-big-house” idea, a concept championed by architect Sarah Susanka in a series of popular home-design books.
At its heart, a slow home is really about good design, she said. “It seems to me the slow home has a real values kind of focus,” Bowie said. Its design grows from the occupants’ emphasis on the quality of time they spend with family and friends, not on the quantity of their possessions or their desire to impress people.
A slow home takes different forms for different people. A family who wants less emphasis on television, for example, might create a viewing area that’s separate from the great room, Bowie said. A family who wants to interact more with neighbors might have a front porch.
Brown said slow homes eliminate the little annoyances that tend to make our already harried lives more stressful—annoyances such as entries without closets, bathrooms that open directly to living areas or laundry rooms so close to the back door that people are constantly tripping over laundry baskets when they enter. He likens those kinds of poorly designed elements to an ill-fitting pair of shoes. They just make it harder to get through the day.
Author Shannon Honeybloom also sees a slow home as being a means of providing nurture. To her, the slow home movement involves determining how you want to live or raise children and then creating an environment that supports those goals, a concept she outlines in her book Making a Family Home. “I think the reality of life these days it that life is really fast-paced,” she said. She advocates creating a way of life and a home that put less emphasis on instant information and entertainment and more on encouraging interaction, imagination and learning.
Honeybloom’s concept of a slow home, then, might include elements such as a comfortable reading chair, a backyard garden where the family can spend time together, a computer located somewhere other than where the children usually play and a step stool in the bathroom that enables little ones to wash their own hands or brush their own teeth. Even something as simple as putting a TV in a cabinet, where it’s not always beckoning you to turn it on, can help slow the pace, she said.
Most average homes designed before 1950 are slow by design, Brown said. They’re often simple, “but they work.” But like the food industry, he said, the housing industry started turning out houses—or “products,” as he calls them—designed for short-term sale rather than long-term livability. Dazzling features and square footage sold houses, not abundant natural light, access to the outdoors or a location in a walkable neighborhood.
Ideally, Brown said, a slow home would be designed that way from the start by an architect who takes into consideration the occupants’ interests, needs and habits.
Nevertheless, he said it’s possible to “slow” an existing home. Something as simple as rearranging the furniture can make your home a better fit, he said. Bigger changes can be made over time.
The slow home movement isn’t “a touchy-feely new-age thing,” Brown said, but rather a way of helping consumers get homes that better serve their needs. “We as consumers can make a difference. It’s about an individual sense of empowerment.”
Brown is the founder of the slow home movement, a philosophy of home design that emphasizes livability and sustainability. It’s about building a home that works for the occupants, not one that’s intended to impress.
The concept was inspired by the slow food movement, with its focus on healthful, sustainable ways of producing and preparing food, explained Brown, an architect, real estate broker and architecture professor in Calgary, Alberta. “You can think of the typical cookie-cutter house as being like fast food”—often supersized and designed to satisfy our craving for beauty, he said. It’s a house that’s designed to seduce us into buying by feeding our fantasies of a more glamorous life, he said, not one that’s necessarily easy to live in or easy on the environment.
A slow home, on the other hand, is reasonably sized and carefully designed to support its occupants. It might have an entry where family members can easily take off their boots, stash their keys and store their backpacks, for example. It might have a living space that encourages people to talk or read, not just watch television or surf the Internet. It’s energy efficient, filled with natural light and designed for easy flow among rooms and access to the outside. “It doesn’t have to be fancy. It doesn’t have to be expensive. It just has to be easy to live in,” Brown said.
Brown and his partners design these types of houses through their firm, Housebrand, and they encourage others to do the same through the educational outreach they call Slow Home Studio (http://www.slowhomestudio.com). Brown and his partner Matthew North have also written a book on the subject, What’s Wrong With This House? Fast Houses, Slow Homes and How to Tell the Difference.
Architect Hallie Bowie has long been guided by a similar philosophy in designing home additions and renovations through her Akron company, New Leaf Home Design. But before learning of the slow home movement recently, she never had a name for it, she said.
Bowie sees the movement as a marriage between green building and the “not-so-big-house” idea, a concept championed by architect Sarah Susanka in a series of popular home-design books.
At its heart, a slow home is really about good design, she said. “It seems to me the slow home has a real values kind of focus,” Bowie said. Its design grows from the occupants’ emphasis on the quality of time they spend with family and friends, not on the quantity of their possessions or their desire to impress people.
A slow home takes different forms for different people. A family who wants less emphasis on television, for example, might create a viewing area that’s separate from the great room, Bowie said. A family who wants to interact more with neighbors might have a front porch.
Brown said slow homes eliminate the little annoyances that tend to make our already harried lives more stressful—annoyances such as entries without closets, bathrooms that open directly to living areas or laundry rooms so close to the back door that people are constantly tripping over laundry baskets when they enter. He likens those kinds of poorly designed elements to an ill-fitting pair of shoes. They just make it harder to get through the day.
Author Shannon Honeybloom also sees a slow home as being a means of providing nurture. To her, the slow home movement involves determining how you want to live or raise children and then creating an environment that supports those goals, a concept she outlines in her book Making a Family Home. “I think the reality of life these days it that life is really fast-paced,” she said. She advocates creating a way of life and a home that put less emphasis on instant information and entertainment and more on encouraging interaction, imagination and learning.
Honeybloom’s concept of a slow home, then, might include elements such as a comfortable reading chair, a backyard garden where the family can spend time together, a computer located somewhere other than where the children usually play and a step stool in the bathroom that enables little ones to wash their own hands or brush their own teeth. Even something as simple as putting a TV in a cabinet, where it’s not always beckoning you to turn it on, can help slow the pace, she said.
Most average homes designed before 1950 are slow by design, Brown said. They’re often simple, “but they work.” But like the food industry, he said, the housing industry started turning out houses—or “products,” as he calls them—designed for short-term sale rather than long-term livability. Dazzling features and square footage sold houses, not abundant natural light, access to the outdoors or a location in a walkable neighborhood.
Ideally, Brown said, a slow home would be designed that way from the start by an architect who takes into consideration the occupants’ interests, needs and habits.
Nevertheless, he said it’s possible to “slow” an existing home. Something as simple as rearranging the furniture can make your home a better fit, he said. Bigger changes can be made over time.
The slow home movement isn’t “a touchy-feely new-age thing,” Brown said, but rather a way of helping consumers get homes that better serve their needs. “We as consumers can make a difference. It’s about an individual sense of empowerment.”
Thursday, April 21, 2011
Existing-Home Sales Rise in March 2011
Sales of existing-home sales rose in March 2011, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7% to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3% below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.
Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain—primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February; the rate was 4.97% in March 2010.
Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago—before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.
“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.
A parallel NAR practitioner survey shows first-time buyers purchased 33% of homes in March, compared with 34% of homes in February; they were 44% in March 2010.
All-cash sales were at a record market share of 35% in March, up from 33% in February; they were 27% in March 2010. Investors accounted for 22% of sales activity in March, up from 19% in February; they were 19% in March 2010. The balance of sales were to repeat buyers.
The national median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Distressed homes—typically sold at discounts in the vicinity of 20%—accounted for a 40% marketshare in March, up from 39% in February and 35% in March 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said some renters are looking to homeownership as a hedge against inflation. “The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” he said. “As buyers gain more financial security, the advantages of homeownership become more obvious. Rents will continue to trend up, especially in comparison with a fixed-rate loan which provides financial stability and gradual accumulation of equity over time.”
Total housing inventory at the end of March rose 1.5% to 3.55 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, compared with a 8.5-month supply in February.
Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain—primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February; the rate was 4.97% in March 2010.
Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago—before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.
“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.
A parallel NAR practitioner survey shows first-time buyers purchased 33% of homes in March, compared with 34% of homes in February; they were 44% in March 2010.
All-cash sales were at a record market share of 35% in March, up from 33% in February; they were 27% in March 2010. Investors accounted for 22% of sales activity in March, up from 19% in February; they were 19% in March 2010. The balance of sales were to repeat buyers.
The national median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Distressed homes—typically sold at discounts in the vicinity of 20%—accounted for a 40% marketshare in March, up from 39% in February and 35% in March 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said some renters are looking to homeownership as a hedge against inflation. “The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” he said. “As buyers gain more financial security, the advantages of homeownership become more obvious. Rents will continue to trend up, especially in comparison with a fixed-rate loan which provides financial stability and gradual accumulation of equity over time.”
Total housing inventory at the end of March rose 1.5% to 3.55 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, compared with a 8.5-month supply in February.
Wednesday, April 20, 2011
Housing Starts Rise 7.2 Percent in March
Nationwide housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units in March from an upwardly revised number in the previous month, the U.S. Commerce Department reported today. Coming on the heels of disappointing declines in February, this gain was represented in both the single- and multifamily sectors, and was mirrored by substantial improvements in building permit issuance for the same period.
"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."
"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB Chief Economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."
Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multifamily sectors as well as three out of four regions. On the single-family side, a 7.7 percent gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multifamily starts also gained back a portion of the ground they lost earlier, with a 5.8 percent increase to 127,000 units.
Regionally, housing starts posted double-digit gains of 32.3 percent in the Midwest and 27.6 percent in the West, as well as a 5.4 percent gain in the Northeast. The South was the only region to post a decline in housing starts in March, of 3.3 percent.
Meanwhile, issuance of building permits, which can be an indicator of future building activity, rose by an impressive 11.2 percent to a seasonally adjusted annual rate of 594,000 units, more than offsetting the previous month's decline. Single-family permits rose 5.7 percent to 405,000 units, while multifamily permits rose 25.2 percent to 189,000 units.
The Northeast was the only region to not post a gain in building permits this March, remaining unchanged from the previous month. Meanwhile, the Midwest posted a 6.9 percent gain, the South, a 6.3 percent gain, and the West, a 37.1 percent gain.
"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."
"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB Chief Economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."
Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multifamily sectors as well as three out of four regions. On the single-family side, a 7.7 percent gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multifamily starts also gained back a portion of the ground they lost earlier, with a 5.8 percent increase to 127,000 units.
Regionally, housing starts posted double-digit gains of 32.3 percent in the Midwest and 27.6 percent in the West, as well as a 5.4 percent gain in the Northeast. The South was the only region to post a decline in housing starts in March, of 3.3 percent.
Meanwhile, issuance of building permits, which can be an indicator of future building activity, rose by an impressive 11.2 percent to a seasonally adjusted annual rate of 594,000 units, more than offsetting the previous month's decline. Single-family permits rose 5.7 percent to 405,000 units, while multifamily permits rose 25.2 percent to 189,000 units.
The Northeast was the only region to not post a gain in building permits this March, remaining unchanged from the previous month. Meanwhile, the Midwest posted a 6.9 percent gain, the South, a 6.3 percent gain, and the West, a 37.1 percent gain.
Monday, April 4, 2011
Buyer’s Market Spurs Confidence in Young Professionals and Affluent Homeowners
As the cold temperatures become a distant memory, and the spring selling season gains momentum, consumers have come to agree on one thing—now’s a good time to get off the fence and into the real estate market. This is the overall theme in the latest American Express Spending and Saving Tracker survey, a monthly survey that tracks the spending and saving habits of consumers in order to get an indication of what’s happening in the market. “This month’s Spending and Saving Tracker provided an up-to-date look at various consumer trends and gave us the opportunity to assess how consumers are feeling about the current market in addition to gauging homeowner confidence,” says Leah Gerstner, vice president of public affairs at American Express.
“This month’s survey points to the fact that consumers overwhelmingly feel that we are in the midst of a buyer’s market,” she adds. The data also points to the fact that a seller’s market is at least a year away, which is certainly positive news. While homeowners aren’t necessarily willing to settle for less than the asking price when selling their home, two of the biggest areas of interest in the latest survey deal with homeowners including home improvement projects on their to-do list, as well as the willingness to include concessions to get their home sold.
Home Improvements
“In looking at the results of our latest Spending and Saving Tracker survey, our thinking was that if consumers overwhelmingly view today’s market as a buyer’s market—which they do—they are likely to have plans to put more money into their home,” adds Gerstner. In fact, the survey found that about 64 percent of homeowners currently have home improvement projects on their to-do list for 2011. While the plans are in place, the amount that homeowners are budgeting to spend has gone down quite a bit from last year. “Homeowners are looking for better ways to stretch their dollars, and many are looking toward energy-efficient home improvements that will pay off in the long run.” The survey shows that among homeowners who are looking to go green, the most common items homeowners would spend their money on include energy-efficient windows and doors, insulation, roofing, heating and cooling systems as well as alternative energy systems.
Concessions
Another finding that stood out in the latest survey had to do with whether or not sellers were willing to make concessions to get their homes sold, especially in today’s market. While 44 percent of sellers were willing to give away appliances during a sale—the biggest concession among young professionals and affluent homeowners—another 28 percent said they would take care of requested repairs in order to get their home sold. “While a large majority of sellers are willing to make concessions to get their home off the market, the willingness to make concessions is down among young professionals when compared with the 2010 survey,” says Gerstner. “This is an important finding as it shows that young professionals are more confident in their ability to sell their homes today.”
“Homeowner confidence in today’s market has increased compared to last year,” says Gerstner. “In fact, the survey shows that the confidence level is pretty evenly split—42 percent of homeowners are confident they will get their asking price in today’s market, while 47 percent of homeowners aren’t that confident.” Even though home values continue to be on the low side, young professionals and affluent homeowners are seemingly more confident in today’s market.
“This month’s survey points to the fact that consumers overwhelmingly feel that we are in the midst of a buyer’s market,” she adds. The data also points to the fact that a seller’s market is at least a year away, which is certainly positive news. While homeowners aren’t necessarily willing to settle for less than the asking price when selling their home, two of the biggest areas of interest in the latest survey deal with homeowners including home improvement projects on their to-do list, as well as the willingness to include concessions to get their home sold.
Home Improvements
“In looking at the results of our latest Spending and Saving Tracker survey, our thinking was that if consumers overwhelmingly view today’s market as a buyer’s market—which they do—they are likely to have plans to put more money into their home,” adds Gerstner. In fact, the survey found that about 64 percent of homeowners currently have home improvement projects on their to-do list for 2011. While the plans are in place, the amount that homeowners are budgeting to spend has gone down quite a bit from last year. “Homeowners are looking for better ways to stretch their dollars, and many are looking toward energy-efficient home improvements that will pay off in the long run.” The survey shows that among homeowners who are looking to go green, the most common items homeowners would spend their money on include energy-efficient windows and doors, insulation, roofing, heating and cooling systems as well as alternative energy systems.
Concessions
Another finding that stood out in the latest survey had to do with whether or not sellers were willing to make concessions to get their homes sold, especially in today’s market. While 44 percent of sellers were willing to give away appliances during a sale—the biggest concession among young professionals and affluent homeowners—another 28 percent said they would take care of requested repairs in order to get their home sold. “While a large majority of sellers are willing to make concessions to get their home off the market, the willingness to make concessions is down among young professionals when compared with the 2010 survey,” says Gerstner. “This is an important finding as it shows that young professionals are more confident in their ability to sell their homes today.”
“Homeowner confidence in today’s market has increased compared to last year,” says Gerstner. “In fact, the survey shows that the confidence level is pretty evenly split—42 percent of homeowners are confident they will get their asking price in today’s market, while 47 percent of homeowners aren’t that confident.” Even though home values continue to be on the low side, young professionals and affluent homeowners are seemingly more confident in today’s market.
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